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🔍 Mini Deep Dive: IDFA Roundup

If you’re a regular reader or have been following general mobile advertising news, you must already be well aware of Apple’s bombshell move to become user privacy first by deprecating the IDFA, and in turn completely resetting the mobile advertising ecosystem as we know it today. This mini-deep dive recaps and analyses all associated developments since the news dropped, while also peering into what it means for the future of mobile advertising.


📰 News


Xbox unveils more next-gen details. After a leak stirred up noise, Xbox confirmed a flurry of details about its next-gen consoles. Most importantly, the Xbox Series S was unveiled, pre-orders (for the Series S and Series X) start on September 22 + officially launch on November 10, and prices were confirmed ($299 for the Series S and $499 for the Series X). In other words, the Series S and Series X are follow-ons to the current Xbox One S and One X consoles, respectively.

There are a few bad takes floating around the internet, so let’s clear the air. Yes, the two-tiered console approach comes with trade-offs, but it’s a smart strategy. Xbox’s goal is to widen its addressable market by lowering the barriers to entry for next-gen gaming. Serving high-end gamers remains the keystone of its approach, but long-term success comes from selling services to a wider audience. The fact that consumers can spend $25 per month and receive a Series S console, Xbox Live, xCloud, and Game Pass means Xbox is offering the best value in gaming (if not entertainment more broadly). That’s a business model evolution to be celebrated, and it’s hard to compete with at scale.

Of course, that doesn’t mean Xbox will immediately win out of the gate. It won’t. The PS5 will have a more successful launch because its user base is larger and it has a stacked list of exclusives that gamers have grown to love. Xbox’s delay of Halo Infinite doesn’t help either. However, the criticisms of Xbox’s content strategy today feel partially reminiscent to what people said about Netflix’s streaming endeavors a decade ago (“there isn’t enough good content” “they can’t compete” “exclusives are risky and expensive”). The difference? Xbox via Microsoft has the balance sheet to rapidly and heavily reinvest, they’re doing just that, and we already know this business model works at scale. Zoom forward a few years and Xbox will likely compete based on content as well as anyone. The kicker is that “competing based on content” will be just one element of its overall strategy, and the fact that the strategy is so multi-faceted is what will be hard for everyone else to compete against.

Lastly, Xbox announced that EA Play (EA’s subscription service) is coming to Game Pass Ultimate. This is a huge win-win-win. EA must’ve received generous terms, it makes Game Pass that much more of a valuable no-brainer for consumers, and it’ll attract more subscribers (across console and PC) to Xbox’s universe. It’s also a reminder that network effects apply to these subscription services. It makes more sense for there to be a small handful of mega-subscription services than for each developer to only have its own.

All in all, Xbox isn’t perfect and there will likely be more stumbles, but the foundation its setting is compelling. Like all things that compound, Xbox’s long-term success will surprise most everyone who is currently lazer-focused on the nitty-gritty minutiae of today’s specs, price, and exclusives. Don’t miss the forest for the trees on this one.

  • Note: PlayStation has another showcase this Wednesday, where we’ll probably learn more PS5 launch details.

Nintendo boosts production and teases a 4K console. There are a couple tidbits to this news:

  • Nintendo’s done a (mostly) great job capitalizing on 2020’s gaming insurgence, but it’s come with operational challenges, namely production delays and a struggle to keep up with demand for the Switch. According to Bloomberg, Nintendo is ramping up its production of Switch consoles by approximately 20%, which should solve any remaining supply constraints. Ramped up production isn’t indefinitely sustainable, but it will lead to continued momentum in the near-term.

  • We’ve known that a “Switch Pro” (or whatever it’ll be called) version is coming likely in 2021, and now Nintendo is telling developers to make their games 4K-ready. Nintendo’s ethos has historically been to make hardware that’s affordable for everyone, but its console strategy may be shifting as it pursues a multi-tiered approach. I think this is wise, especially since the current Switch tech will appear extra outdated once the PS5 and Xbox Series X launch. I don’t think this does much to expand Nintendo’s addressable audience (not without winning over more third party publishers first), but it’s a great way to unlock pricing power, get hardcore fans to upgrade, and extend the life of the current console generation.

Huuuge Games (maybe) prepares to IPO. A couple weeks ago, Huuuge Games announced that it filed a prospectus relating to a potential IPO with the Warsaw Stock Exchange, although no final decision has been made on whether Huuuge will actually go public. As the prospectus is still under review by the Polish Financial Supervision Authority, no official business performance metrics are available for analysis. That said, Huuuge did report $260M in revenue for 2019 and $152M in 2017, which is a 1.7x increase over a 2 year period. While a strong comment about this revenue growth cannot be made without looking at other business KPIs, Sensor Tower definitely showcases a healthy revenue trajectory across Huuuge’s portfolio.

Net Revenue by Publisher

Source: Sensor Tower

On September 7th, CEO of Huuuge Games, Anton Gauffin, released a letter to express his thoughts on the future of the company. Notable highlights include:

    1. 12 offices globally with 600+ employees

    2. Huuuge’s vision is to empower billions of players to “Play Together.”

    3. Anton’s future focus will lie in building a winning team on a global scale.

    4. This focus will be realised through executing on a “Build & Buy” strategy, which relies on M&A and Publishing Partnerships where studios can plug into Huuuge’s technology infrastructure to allow both Huuuge and its partnering studios to reach greater scale.

On paper, the “Build & Buy” strategy is definitely a sound way to grow fairly predictable value in a highly unpredictable market. But Huuuge has primarily been an in-house production unit and has built most of its revenues success on two of its very first Slots titles: “Huuuge Casino Slots” and “Billionaire Casino Slots.” These continue to drive a majority of business’s revenue growth today, as can be seen below.

Net Revenue by App

Source: Sensor Tower

Therefore, while Huuuge has definitely proven itself on the Build aspect, it doesn’t seem like follow-up Build titles from Huuuge’s internal studios have been able to make a significant contribution to portfolio revenues. Further, the success of the Buy aspect remains to be seen. They recently acquired Double Star Studios, but the studio’s flagship title “Bow Land” has still not managed to scale significantly, let alone show up as a significant revenue generator in Huuuge’s portfolio.

Broadly, we’re very eager to get our hands on Huuuge’s prospectus, dive in, and provide a deeper analysis of the business. However, based on our limited data, it does seem like the business has a lot left to prove before investors buy into the viability of its “Build & Buy” strategy. Our best wishes are with the team, and we hope to see the company eventually go public!

Fortnite gets ready to host more live music events. Fortnite is one of the best venues (if not the best venue) for a brand to build and actively engage a huge audience. For example, it’s currently a great way to engage with Marvel’s Avengers, and it’s proven to be a great stop for artists like Marshmello and Travis Scott, too. After all, where else can a 10 minute event lead to millions of new fans? The question has always been a matter of scale. How can Fortnite get to the point where literally anyone has the tools to throw their own in-game event? That will take years to unfold, but Epic Games just unveiled the next stepping stone.

The company constructed a “Party Royale Spotlight” studio in LA where numerous artists will begin to record in-game events. Dominic Fike performed on Saturday, and there are two more concerts scheduled for the following two weeks. Plus, in a COVID-driven world when in-person concerts are constantly replaced by digital concerts, this is just another avenue of presentation. In other words, even though in-person concerts will inevitably come roaring back, there’s a major opportunity to normalize this experience within Fortnite vs other digital options. Plus, if Epic succeeds at accelerating its pace of in-game music events, there’s probably opportunity to experiment with and accelerate the pace of other types of events. The hope is that Epic will eventually be comfortable enough with its creator capabilities that it will roll out the in-game event tools for more and more people. Although it’s crazy to think that maybe one day there will be artists native to Fortnite (similar to how people get discovered and blow up on TikTok these days), it’s certainly plausible. Whatever the case, Epic’s pace of innovation across live ops remains unmatched.

Quick hits:

  • Ninja returns to Twitch, likely on an exclusive contract (that’s less generous than his previous Mixer contract). Link

  • Amazon opens Twitch’s ad inventory to programmatic buyers. It was a matter of time. Link

  • Apple’s new rule says game streaming services (like xCloud and Stadia) are allowed, but the offered games must be downloaded from Apple’s app store, not from within an all-in-one app. This is still not an ideal user experience. Link

  • GameStop reported another rough quarter. It’s amazing how well management tries to put a positive spin on something destined to go to zero. Link

  • Gameye raised $2.4M to better provide server infrastructure to multiplayer games and online events. Link

  • Addicting Games acquired Mope.io, a “multiplayer animal survival game,” for a seven-figure sum. Link

🖥 Content Worth Consuming

Twitch Versus Just Changed Esports Forever. “A new product for esports just came out from Twitch called "Versus by Twitch." Located at https://esports.twitch.tv/ - this new Twitch product allows any content creator and Twitch streamer to start up an esports tournament of their own. Esports tournaments are available to be run by the entire streamer community of Twitch. In this video I want to cover some of the massive implications for esports that Twitch Versus has. It's one of the greatest ways for new esports talent to be discovered and new streamers to grow on Twitch. Esports hasn't had a great way for new players to be found in games like League of Legends, Overwatch, and Call of Duty. With the arrival of community run tournaments, Twitch Versus will allow more people to become professional gamers.” Link

Elite Game Developers 068: Jens Hilgers, BITKRAFT. “Today I'm talking with Jens Hilgers, who is an investor and serial entrepreneur, and well known for his work in the esports industry. As a day job, Jens is the Founder Partner at BITKRAFT Ventures, a VC firm focusing on early-stage investments for gaming, esports, and interactive media. With Jens, we talk about entrepreneurship, fundraising and how gaming and esports will evolve in the coming years.” Link

Ubisoft Forward (September 2020). Updates include Immortals Fenyx Rising, Prince of Persia: The Sands of Time remake, Riders Republic (multiplayer), an update on Watch Dogs: Legion, and more. Link

CDL Drama, Easter Eggs, and Lies | The Eavesdrop Podcast Ep. 69. The first 30 minutes is an interesting interview with the commissioner of the Call of Duty League (CDL). Link

Thanks for reading. See you next week!

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